Contracts and Limitation of Liability

In September 2016, the South Australian Government implemented a major procurement reform strategy aimed at reducing red tape and costs to suppliers by adopting a less complex, more agile procurement framework.

The State Procurement Board played a significant role in developing the policy framework that underpinned the reform strategy, which increased the standardisation of procurement practices and documents across government and has simplified the liability and insurance requirements.

There is now a Standard Goods and Services Contract Template (Template) which is suitable for use for all low to medium risk, non-complex (i.e. standard) goods and/or services government procurements, including procurements of consultancy services and for panel contracts.

The new requirements mean that the contract:

does not require the supplier to provide indemnities

allows the selection of a default liability cap between one and five times the value of the contract

does not require that the State be named on insurance policies, or be provided with a copy of the insurance certificate.

The Template is not suitable for use in the following circumstances:

Information and Communications Technology Contracts under government contract arrangements

Software licences hosting agreements and contracts for software development or customisation

Minor construction works including goods and services acquired in conjunction with the works

Principal Contractor controlled contracts – where a supplier is contracted to manage several procurements of goods and/or services on behalf of the Principal

Contracting with universities of the CSIRO for the provision of educational services, technical and academic research

Joint ventures/partnerships – where the joint venturers/partners share the costs, risks and benefits

Public Private Partnerships – usually used in the development of public sector infrastructure assets.

As a result of this reform strategy, the Department of Treasury and Finance “Guidelines for the Limitation of Liability of Suppliers, Consultants and Contractors” has been abolished with effect from 10 February 2017.

The majority of agency procurements will now be subject to the Template. For those procurements that are not suitable for use under the Template, as listed above, any limitations can be approved by the Chief Executive or delegate.

For contracts that are not suitable for the Template, agencies are encouraged to use previously approved frameworks where appropriate or set up internally approved frameworks.